Grain futures closed mixed Wednesday after soybeans found support on news that a trade delegation from China signed deals while visiting the U.S. Other markets weren’t so lucky.
While weather and slow exports weighed on corn and wheat, trading on Wall Street turned volatile after the minutes of last month’s Federal Reserve Bank meeting showed that the central bank is concerned about persistent low inflation. The minutes included no details on when the Fed would begin winding down its huge balance sheet, which swelled in the wake of the financial crisis.
The news sent the dollar plunging. Currencies tend to strengthen on rising interest rates, but the minutes suggest that the Fed is in no hurry to boost borrowing costs. Treasuries jumped, lowering interest rates for borrowers – and savers, too. Stocks pared some of their earlier gains.
The weak inflation sentiment from the Fed turned investors against commodities, especially crude oil, which broke below $47 a barrel despite a large drop in inventories last week. Traders also remained concerned that rising U.S. production will offset cuts by OPEC and its allies.
The break in crude could weaken diesel costs headed into harvest, although propane was steady to a little higher.
Corn prices tried to limit losses as beans turned around, but corn still finished modestly lower. December futures took out the Sept. 30 low from last fall, with a bear flag formation pointing to potential near $3.50/bu. futures for harvest lows.
Corn’s downturn came despite positive news on usage at ethanol plants. Production soared to near-record levels last week as ethanol plants took advantage of some of the best margins of the year to pump out biofuels. That move also swelled stocks, adding pressure to ethanol prices.
Export sales released Thursday are expected to run a little below last week’s total of 26.8 million bu., with most of the bookings new crop as the 2016 crop marketing year ends. Railcar loadings of grain last week were down 24% from last year, although year-to-date totals are 5% higher.
Rains moving through the Midwest this week are expected to provide good coverage to most of the growing region, also keeping the market on the defensive.
Funds were modest sellers of corn today. The preliminary report from the Chicago Board of Trade put volume at 420,137, compared to 384,147 on Tuesday.
Soybeans reversed higher Wednesday, posting small gains after news broke of the Chinese trade delegation signed deals to buy 140 million bu. of U.S. soybeans on Tuesday.
While these ceremonies are mostly window dressing, some purchases usually show up in daily and weekly totals announced by the U.S. Department of Agriculture. Pre-harvest sales of new-crop soybeans are running at the lowest level in eight years as large South American supplies weigh on the world market.
Before turning higher, November futures slipped to new seven-week lows, but the contract closed back inside its down-trending channel for the last four weeks.
Export sales in the latest week are expected to be down a little from the 25.1 million bu. sold in the previous period.
Funds were light buyers of soybeans on thin volume. Trade was at 140,176 contracts, down from 191,448 on Tuesday.
Wheat prices closed mixed Wednesday. While spring wheat posted double-digit gains in Minneapolis, Minn., futures plunged to new contract lows for both hard and soft red winter wheat. Rains moving across the Plains are boosting moisture for planting, and export news remains routine.
Egypt, as expected, filled its latest tender out of the Black Sea, buying 13 million bu. One cargo came from Ukraine, with the rest out of Russia, where abundant supplies of cheap grain remain an anchor on sentiment. Prices were 60 cents below delivered costs out of the Gulf of Mexico.
Weekly export sales of U.S. wheat out Thursday are expected to run close to last week’s total of 17.1 million bu. That is in line with USDA’s forecast for the marketing year.
Funds were modest sellers of wheat today. Volume in soft red winter wheat again topped soybeans, at 164,746, although that was down from Tuesday. Volume in hard red winter wheat was down slightly to 57,099.